“What’s Mine” and “What’s Yours”

What happens to assets owned before a de facto relationship or marriage?

A primary concern for many separating or divorcing couples in Australia is what will happen to their property or assets owned before the de facto relationship or marriage. Does a house owned before marriage form part of the matrimonial property pool? In almost all cases, the short answer is yes. Assets owned before a de facto relationship or marriage are rarely excluded from the property pool after separation. This is particularly so in longer marriages or relationships.

Determining “what’s mine” and “what’s yours” may be challenging. Separating couples often face challenges in identifying relationship or matrimonial property because, often, separate property can become relationship or matrimonial property.

The case of Stanford and Stanford [2012] HCA 52 highlights the importance of, in all property cases, considering whether it is just and equitable to make an Order. In longer relationships or marriages, considering whether an adjustment or Order is just and equitable is easier to satisfy. In shorter relationships and marriages, particularly with no children, it may be that the assets remain as they were before the commencement of the marriage or relationship.

The four steps of property division are:

1. Identify and value the assets and liabilities of each person.
2. Assess the contributions of each person
3. Assess the future needs of each person
4. Ensure the division of the property is just and equitable.

If an initial contribution, such as a house owned before the relationship or marriage, was kept separate from other property, particularly if your relationship was short, the court might decide to look at the assets in isolation. The result may be that each person retains what they bought into the relationship or marriage.

The court might take a different approach if an initial contribution was intermingled with other property. Important factors may include:-

1. Did the asset appreciate during the relationship or marriage?
2. Did both parties contribute to that asset during the marriage or relationship?
3. Is there a relationship between the contribution and some or all of the asset's appreciation?

In circumstances whereby an adjustment to the property pool is warranted, any assets bought into the relationship and marriage are considered at the second step above and regarded as initial financial contributions.

The length of the relationship or marriage is considered in all property settlements. The court may give greater weight to the initial contribution if there was a short relationship or marriage, and less weight may be given to the initial contribution if there was a long relationship or marriage.

At Grace Family and Collaborative Law, we provide bespoke advice specific to your circumstances. If you have a question about separation, divorce, or property division, contact our office to book a FREE 15-minute clarity call today. 1300 414 855 or tarryn@gfclaw.com.au.